We, like all taxpayers, would like to see more development occur in central Indiana without the need for so-called TIF districts.
But the reality is that big, bold projects, especially downtown, in many cases can’t get off the drawing board without tapping tax-increment financing funds to make the numbers work. We’re thankful that TIF money was available, for instance, to help make Circle Centre a reality two decades ago and to help construct the iconic JW Marriott in the throes of the Great Recession—two projects that contributed mightily to downtown’s momentum.
For TIF critics, however, there’s always the lingering fear that developers play a game of bluff. By casting their projects as infeasible without subsidies, they bolster their potential profits and shift risks onto local government.
We applaud the middle ground Mayor Joe Hogsett’s administration so far has taken with this important but easy-to-abuse economic development tool. For starters, Hogsett proposed an expansion of the downtown TIF to include a pivotal site, the former GM stamping plant, which has struggled to attract a project befitting its strategic location. The City-County Council OK’d the expansion this month.
And now, as Scott Olson reports on page one this week, the mayor is shifting more risk to developers—at least on smaller, neighborhood projects.
Under the way TIFs traditionally have worked in Indianapolis, the city sold bonds to fund sidewalks, roads or other improvements and then paid down that debt using the additional property tax revenue generated by the new development.
That’s all well and good if the project is a success and new property taxes pour in. But if the new revenue fell short of amounts needed for debt payments, the city was the final backstop to make up the shortfall. Under Hogsett’s new approach for neighborhood projects, the developer backs the bonds and is on the hook.
The approach is not without risk, since it could make some worthy private-sector developments harder to finance and therefore not get built. But we think the mayor is on the right track.
Hogsett runs a cash-strapped city with immense funding needs, especially in the neighborhoods—which he pledged would be the focus of his administration.
We’re glad he’s not neglecting downtown, as demonstrated by the recent downtown TIF expansion. But there’s no money to waste. In his personal life, Hogsett’s a frugal guy, at least if his campaign ads highlighting his 40-year-old basketball shoes are to be believed. Applying that tightfistedness to Indianapolis finances will only make the city stronger.•
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